We report a direct experimental observation of Pancharatnam’s phase, which is closely related to Berry’s topological phase. The experiment involves measurement of the phase change in one beam of a laser interferometer as the polarization state of light is taken along a closed circuit on the Poincaré sphere. The phase change is found to be equal to half the solid angle subtended by the circuit at the center of the Poincaré sphere. Apart from providing a striking demonstration of the topological phase, the experiment demonstrates that unitary time evolution of a system is not essential for the appearance of the topological phase.